Bitcoin vs. MicroStrategy: Which Is the Ultimate Crypto Investment?

After a significant post-election rally, Bitcoin (BTC) has reached another all-time high and is on the verge of crossing the $100,000 mark for the first time, boasting a 110% increase this year.

However, there's a crypto stock that's outpacing Bitcoin's performance: MicroStrategy (MSTR), which has surged 462% in 2024 due to its aggressive Bitcoin acquisition strategy. So, which should you invest in: Bitcoin or MicroStrategy?

MicroStrategy's Bitcoin Strategy

To understand the comparison, we must look at how MicroStrategy has transformed its business. It began in August 2020 when it became the first publicly traded company to include Bitcoin in its capital allocation strategy.

Now, four years later, MicroStrategy holds 331,200 bitcoins, valued at approximately $30 billion. This amount surpasses the cash reserves of major companies like Nike and IBM.

MicroStrategy's pace of Bitcoin accumulation is remarkable. Between Oct. 31 and Nov. 10, it added 27,000 bitcoins, and between Nov. 11 and Nov. 17, it added another 51,780 bitcoins. The company plans to invest an additional $42 billion in Bitcoin over the next three years, presenting itself as a Bitcoin Treasury Company.

Caveats About MicroStrategy's New Strategy

Before the launch of spot Bitcoin ETFs in January, investors bought MicroStrategy as a way to gain exposure to Bitcoin. With the new ETFs available, the appeal of MicroStrategy as a Bitcoin proxy stock has diminished.

Now, MicroStrategy is taking bold steps to prove it is more than just a Bitcoin proxy, even using leverage to increase its exposure. This strategy has paid off, with 462% returns, making it the second-best performing stock of 2024, well above Bitcoin's performance.

However, some analysts raise concerns about the sustainability of MicroStrategy's strategy, particularly the assumption that Bitcoin's price will always increase. Bitcoin’s notorious volatility poses risks, especially as MicroStrategy utilizes debt for its purchases.

The Cyclical Nature of Bitcoin

Bitcoin is known for its cyclical nature, influenced by halving events every four years. During certain cycles, some companies in the Bitcoin ecosystem outperform the cryptocurrency itself. For instance, in 2023, some Bitcoin mining stocks outperformed Bitcoin significantly, while in 2024, the trend has reversed.

For long-term investors, Bitcoin remains the best option as it eliminates the concern of market cycles and company strategies. While MicroStrategy's bold moves are commendable, my investment preference leans towards Bitcoin.